Cordiant to soothe investors with break-up to cut £200m debt

Cordiant, the advertising group which includes the Bates Worldwide agency, is planning a break-up of its media assets in an attempt to cut debts and restore investor confidence.

The move, which is being led by David Hearn, the new chief executive, could see Cordiant stripped down to include only the Bates business which would then be a takeover target for larger media groups such as WPP, Havas and Publicis.

Plans are understood to be well advanced to sell several subsidiaries before Cordiant reports its results at the end of March. Businesses up for sale are thought to include Scholz & Friends, the German, advertising network, Financial Dynamics, the London-based financial PR agency and Healthworld, Cordiant's advertising and communications consultancy which specialises in the pharmaceutical industry.

One media expert: "They've got results next month and they have to cut the debt by then. If they don't have confirmed sales then at least they have to have indicative offers."

The plan is to raise about £100m and halve Cordiant's debts. Currently the debts of £200m compare with a stock market value of just £112m. However, Cordiant will be selling at the bottom of the market as media valuations are at rock bottom levels due to sharp cuts in advertising spending. Cordiant built up its collection of media assets during the stock market boom of the late 1990s.

It is understood Financial Dynamics will be sold to its management for less than £20m. It was valued at £50m when acquired by Lighthouse Communications in July 1999 which was in turn bought by Cordiant. It would be Financial Dynamics' fifth owner in its 16-year history. It is understood that the management is talking to various private equity groups about a takeover.

Mr Hearn is understood to have spent most of his time working to improve Cordiant's core business, Bates Worldwide. It is understood he has successfully stemmed the outflow of clients.

Earlier this month Cordiant announced it was selling its Australian advertising agency George Patterson Bates for between £35m and £40m.